Small Business Taxes Explained

Federal lawmakers have proposed tax reform legislation that provides long-overdue relief to small business job creators, which create two-thirds of new jobs in the country.

But how are small businesses taxed in the first place?

The vast majority of small businesses are taxed as “pass-through entities,” meaning owners consider their business profits as individual income and are taxed at the individual rate structure. These rates begin at 10 percent in the first $9,075 of taxable income for a single filer ($18,150 if married) and can reach 39.6 percent on taxable income over $406,751 ($457,601 if married).

These high rates are uncompetitive, and put small businesses at a disadvantage with their big business and international competitors. This is evidenced by the sorry state of Main Streets across the country.

But relief is finally on the way. Final legislation will either create a separate small business tax rate structure or create a sizable small business tax deduction. Either way, the importance of small businesses will finally be reflected in the tax code. That’s something all small business owners, their employees, and the communities where they locate can celebrate.

Workforce Development

Pennsylvania has a workforce problem - a growing skills gap that is making it difficult for employers to find qualified job candidates to fill open positions. We're fighting to close this gap by working with businesses, educators, students and their families to help build the skilled workforce of tomorrow.

Responsible State Spending

Government should operate within its means: evaluating the effectiveness of current programs; weeding out waste, fraud and abuse in spending; and investing wisely in worthy state-run programs that directly benefit taxpayers.

Stop New Energy Taxes

Our natural gas industry holds the promise of economic growth and job creation. Additional taxes hinder this opportunity and drive companies to states with friendlier tax climates that share our resources. We're fighting against proposed new taxes on the industry that would pay for more state spending.